Federal CSR Case is a Win for ACA Insurers

Tuesday, September 4th marked a big moment for providers in the Affordable Care Act, when Montana Health Co-op was awarded a win in the ongoing battle between insurers and the government over cost-sharing reduction payments (CSRs). The health cooperative, which serves about 50,000 members throughout Idaho and Montana, filed suit against the federal government in January, claiming it was owed approximately $5 million in CSRs for 2017.

U.S. Court of Federal Appeals Judge Elaine Kaplan agreed, ruling that the government had failed to fulfill its obligation under the ACA when it halted the payouts in October 2017. In making her decision, she specifically referred to the sentence in the ACA that states: “An issuer of a qualified health plan making reductions under this subsection shall notify the Secretary of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions.”

In 2014, during the Obama administration, the Department of Health and Human Services began making CSR payments to insurers to help low-income Americans pay for their policies under the ACA. Later that year, Republicans in the House of Representatives sued the Administration, saying they and others in Congress had never signed off on the necessary funds to make these payments. They won, and a subsequent appeal was tabled due to the election of Donald Trump.

Trump-appointed Attorney General, Jeff Sessions, issued an opinion in 2017 that the funds were never appropriated, so the payments were halted by the government. Unfortunately, while this meant the insurers no longer received these monies, they were still required by the ACA to offer the same low out-of-pocket costs to patients who were qualified. Naturally, this led to an outcry from payer organizations and had led to a flurry of lawsuits from health plans and cooperatives, attempting to recoup the lost funds.

Common Ground Healthcare and Sanford Health Plan, two of the six payer organizations that still have cases working their way through the judicial system, should be pleased about the Montana Health verdict, though even with a ruling in their favor, the Department of Justice could appeal. In that case, the appeal would be tried by the Federal Circuit Court of Appeals, the same court which ruled earlier this year that HHS did not have to make risk corridor payments to Moda Health, or to any ACA insurers, in a reversal of a 2017 ruling brought by the Court of Federal Claims.

However, that ruling hinged on the presence of a Congressional appropriations rider, a factor not present in the Montana Health case. Karen Early, the director of operations, says the company is pleased with the judge’s ruling, adding that the CSR money helped keep services affordable for their members. “These are funds that do not benefit the health insurance company.” she said on Thursday, “The cost-sharing reduction funds are just benefit money that is passed through the health insurance company to offset the costs of benefits for folks with lower incomes.”

Emerald Coast Medical Association will continue to monitor the legislation and trials regarding changes to the ACA and its benefits. We are committed to keeping our valued members informed and up to date. If you are not a member, we encourage you to attend a monthly meeting, free of charge, to find out how a strong alliance can help you accomplish more as physicians and also to grow and expand your horizons outside of work.



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